Simply Amazing. WPX Energy’s (NYSE:WPX) unaudited results for the second quarter of 2014 reflect a 57 percent jump in domestic oil production and stronger than expected natural gas production vs. a year ago.
As a result of well performance, enhanced pad design, larger stimulations and recent technical work in the company’s oil operations, WPX is:
•Adding approximately 200 drilling locations to its Williston Basin inventory
•Increasing plans for Gallup oil play spuds from 29 to 40 this year using the same rig count
•Raising guidance for 2014 domestic oil production growth from 40% to 55%
During the second quarter, oil and liquids (NGL) sales accounted for 47 percent of WPX’s total product revenues. Domestic oil revenue grew 60 percent quarter-over-quarter from $121 million a year ago to $194 million in second-quarter 2014. WPX’s performance also is driven by development of the company’s significant proved natural gas reserves, which exceeded 3.5 trillion cubic feet at year-end 2013.
“Our exposure to high-margin oil basins strengthens the diversity in our portfolio and gives us the opportunity to deploy capital in the most optimal way,” said Rick Muncrief, WPX president and chief executive officer.
“WPX’s oil assets are an important part of our value creation ability. We’re excited about adding significant inventory in some of the highest quality acreage in the entire Williston Basin,” Muncrief added.
OIL HIGHLIGHTS AND OPERATIONS SUCCESS
WPX is increasing its well inventory by approximately 200 locations in the Middle Bakken and Upper Three Forks formations in the Williston Basin following the technical analysis from completing wells in a tighter infill density pattern.
WPX also is transitioning to larger stimulations in Williston well completions. Pilot work to increase proppant levels by approximately 25 percent in two wells – one in the Middle Bakken and one in the Upper Three Forks – enhanced performance by 33 percent and 60 percent, respectively, in cumulative production over 180 days.
The company initiated completion on 10 Williston wells in the second quarter using the 25 percent increased proppant level and plans to do even higher concentrations during the second half of 2014. A completion using 6 million pounds of sand on the Ruby multi-well pad was finished at the end of July. This is twice the size of WPX’s historical Williston completions and is expected to become its new standard in the basin.
In the San Juan Basin’s Gallup oil play, WPX is more than 25 percent ahead of its 2014 drilling plan with 19 wells spud as of June 30 vs. a plan of 15.
WPX’s 30-day IP rates for its Gallup wells in 2014 have averaged 626 barrels of oil equivalent per day, up more than 30 percent vs. an IP rate of 474 Boe/d in 2013.
As a result of drilling efficiencies, lower well costs and higher production, WPX is adding 11 more wells to its 2014 Gallup drilling plan. WPX now expects to spud 40 Gallup wells this year vs. the original plan of 29 using the same rig count in the basin.
To expedite development of the company’s domestic oil properties, WPX is adding $100 million to its 2014 capital plan. The increase will fund the additional Gallup drilling, as well as larger stimulations and flaring reduction efforts in the Williston Basin where WPX is currently capturing up to 90 percent of its associated natural gas volumes.
SECOND-QUARTER 2014 FINANCIAL RESULTS
WPX reported an unaudited net loss attributable to WPX Energy of $135 million for second-quarter 2014, or a loss of $0.66 per share on a diluted basis, compared with net income of $18 million, or income of $0.09 per share, in the same period a year ago.
For the first six months of 2014, WPX reported an unaudited net loss attributable to WPX Energy of $117 million, or a loss of $0.58 per share on a diluted basis, compared with a net loss of $98 million, or a loss of $0.49 per share, for the same period in 2013.
Results for the second quarter and first six months of 2014 were impacted by a $195 million before-tax loss, or an after-tax loss of $0.61 per share, associated with the sale of a portion of WPX’s working interests in certain Piceance Basin natural gas wells, along with $36 million in impairments of domestic exploratory well costs and leasehold, or an after-tax loss of $0.11 per share. These items more than offset higher consolidated oil revenue which increased 48 percent quarter-over-quarter.
Excluding unrealized mark-to-market gains (losses), the loss on the sale of the working interest, and impairments of exploratory well costs and leasehold, WPX had adjusted income from continuing operations of $11 million, or income of $0.06 per share on a diluted basis, for second-quarter 2014, compared with an adjusted loss from continuing operations of $44 million, or a loss of $0.22 per share, for the same period in 2013. A reconciliation accompanies this press release.
For the first six months of 2014, WPX had adjusted income from continuing operations of $55 million, or income of $0.27 per share on a diluted basis, compared with an adjusted loss of $95 million, or a loss of $0.47 per share, for the first six months of 2013.
Improved results in 2014 reflect the benefit of a 60 percent increase in domestic oil revenues, higher weighted average gross sales prices for domestic natural gas and natural gas liquids and lower per-unit costs for certain expenses.
The weighted average gross sales price – excluding revenue deductions – for domestic natural gas was $4.03 per Mcf in second-quarter 2014 compared with $3.78 per Mcf a year ago.
The weighted average gross sales price – excluding revenue deductions – for domestic oil was $88.94 per barrel in second-quarter 2014 compared with $88.62 per barrel a year ago.
The weighted average gross sales price – excluding revenue deductions – for domestic NGL was $44.18 per barrel in second-quarter 2014 compared with $37.41 per barrel a year ago.
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